Solar Power Prices Going Lower & Lower

We’re in the midst of a massive cleantech revolution. Solar power is beginning to disrupt the hell out of the power industry. Electric vehicles are on the verge of putting gasmobiles to sleep. Wind power is already one of the cheapest options for new electricity generation in the world — if not the cheapest. The movement is exciting to watch. And, in a decade or so, we might need to change our name from Solar Love to Electricity Love. The solar revolution is certainly one of the more exciting things to watch. Below is some solar number fun that should get your blood pumping. Full disclosure: much of the legwork for this piece was done by one of our excellent readers — we’ll just call him Solar Love advisor #1.

Low Solar Prices Around the World

EU solar without subsidies as low as $1.20/watt: Deutsche Bank has reported that about ⅓ of small- to mid-sized solar installations in the EU are now going in without subsidies. Furthermore, “Multi-megawatt projects were being built south of Rome for €90c/W,” as RenewEconomy notes. “This was delivering electricity costs (LCOE – with 80 per cent self consumption) of around €80/MWh (€8c/kWh).” That’s about $1.20/W and 10–11¢/kWh.

UK solar down to $1.59/watt: The UK’s largest solar far, a new 34-megawatt solar farm near Leicestershire in the English Midlands, is said to cost just over one pound a watt ($1.59/W). That’s about 20% less than the UK’s Department of Energy and Climate Change number for large-scale solar in 2012.

Spain unsubsidized solar down to $1.47/watt: A completely unsubsidized 250 MW solar farm being developed in the northwestern region of Cádiz, Spain, is reportedly going to come in at €275 million, which would be about €1.1/watt or $1.47/watt.

Germany’s average solar PV price at $2.08/watt (unsubsidized): The Photovoltaik-Preisindex from photovoltaik-guide.de has the average solar power system price in Germany (including utility, commercial, and residential solar PV system) at €1.56 ($2.08) in July. The lowest price it hit on that index was €1.50, or $2.00/watt, in February.

India solar farm comes in at $1.52/watt: Shifting over to India, the price is not all that different from the UK and Spain. A 100-megawatt solar farm in the Ramanathapuram district of Tamil Nadu is supposed to cost ₹920 billion ($15.16 million at the moment), which would be about $1.52/watt.

Australia getting/giving rooftop solar for as low as $1.90(USD)/watt for residential solar (before subsidies): Since I’ve used USD above, I’m using it here, too. Solar Choice’s July Solar PV Price Index indicates a before-subsidy low of AUD$2.06/watt (USD$1.90/watt) for residential solar. After relevant feed-in tariffs, the low is AUD$1.38/watt (USD$1.27/watt). The AUD$2.06/watt low was in both Western Australia and Tasmania. The after-subsidy low of AUD$1.38/watt was in Western Australia (Perth). After incentives, the average price of residential solar down under was AUD$1.76/watt (USD$1.62/watt) in July. Impressive.

Translating To ¢/kWh, And The US Situation

The $/watt numbers are interesting, but what we often want to know is actually ¢/kWh. That helps us compare to our electricity bills and to other types of power plants. To do a location-based comparison, we also need a solar insolation map. Given that the largest number of our readers are American (as well as the two of us writing this article), we’ve decided to focus on the US in this section.

Using 20-year, 5% financing, the EIA’s 1c/kWh projection for fixed O&M (no subsidies), and the US solar insolation map above, we get these numbers:

In New York, the average price of residential electricity was 18.3¢ per kWh.

In Illinois, it was 10.5¢ per kWh.

In Michigan, it was 14.2¢ per kWh.

In Florida (which is in Zone 4 of that solar insolation map), it was 11.3¢ per kWh.

In California (which is mostly in Zone 3, but partly in Zones 1, 2, and 4), it was 15.8¢ per kWh.

In Texas (which is mostly in Zone 3, but partly in Zone 2), it was 11.2¢ per kWh.

In other words, the average price of residential electricity in the above states (and the US on average) is considerably higher than solar at $1.50/watt or even $2.00/watt over 20 years, and the case would get even better if you included the rising electricity prices that are projected by basically everyone in the industry. (For non-residential electricity prices or prices for other states, check out the full EIA spreadsheet.)

Basically, when we could get to Australia’s or Europe’s solar price level, solar will blow up across the US even more so than is happening today.

What are the best US solar prices we’ve seen?

We’ve seen 5.8¢ per kWh in New Mexico after federal and state solar incentives, and about 10.8¢ per kWh before those incentives. Across all sectors, New Mexico retail electricity was 8.8¢ per kWh in May. In the residential sector, it was was 11.2¢ per kWh; in the commercial sector, it was was 9.2¢ per kWh; and in the industrial sector, it was 6.1¢ per kWh.

I’m sure there are many more stories like these. The costs for many projects aren’t often revealed publicly. Notably, however, those two examples above are for large solar power plants. Still, in Q1 of 2013, US residential solar system prices were seen for less than $3.00/W. That would be less than 14.8¢ per kWh in a Zone 2 region, beating the 20-year average price of residential electricity (with 3% inflation) in all Zone 2 states (Arizona, New Mexico, Colorado, and Texas would be 15.9¢ per kWh; Utah would be 15.7¢ per kWh; Nevada would be 16¢ per kWh; and California would be 16.6¢ per kWh).

And, to be honest, your solar panels should last well over 20 years, even well over 30 years, and after a 20-year payoff the electricity becomes essentially free.

Ah, EIA Projections…

So, just to give a sense for how behind the times, the EIA can be, it is projecting US solar will be 13¢ per kWh in 2018, even using 30-year solar system lifespans.

To reiterate, Palo Alto got a solar farm for a cost of 9.9¢–12¢ per kWh (before subsidies) through a 30-year PPA, and New Mexico got one for 10.8¢ per kWh (before subsidies) through a 25-year PPA … 5 years before 2018.

About the Author

Zachary Shahan is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy since 2009.
Aside from his work on CleanTechnica and Planetsave, he's the founder and director of Solar Love, EV Obsession, and Bikocity.
To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.

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